Steganographic file systems are a kind of file system first proposed by Ross Anderson, Roger Needham, and Adi Shamir. Their paper proposed two main methods of hiding data: in a series of fixed size files originally consisting of random bits on top of which 'vectors' could be superimposed in such a way as to allow levels of security to decrypt all lower levels but not even know of the existence of any higher levels, or an entire partition is filled with random bits and files hidden in it.
In a steganographic file system using the second scheme, files are not merely stored, nor stored encrypted, but the entire partition is randomized - encrypted files strongly resemble randomized sections of the partition, and so when files are stored on the partition, there is no easy way to discern between meaningless gibberish and the actual encrypted files. Furthermore, locations of files are derived from the key for the files, and the locations are hidden and available to only programs with the passphrase. This leads to the problem that very quickly files can overwrite each other (because of the Birthday Paradox); this is compensated for by writing all files in multiple places to lessen the chance of data loss.